Recent reports that financial planners operating within National Australia Bank were committing forgery and doctoring customer files comes on top of revelations last year about serious impropriety at Commonwealth Bank and Macquarie Bank.
These are major institutions that have gained our trust over many years and now that has been shattered.
We understand that NAB is reviewing the files of some of its 1700 financial planners.
NAB has quietly paid $10 million to $15 million in compensation during the past five years to 750 customers who received inappropriate advice. It is unclear how many further cases could arise as the bank reviews files on its financial advisers.
ASIC’s investigation has revealed that customers of Macquarie Wealth were deliberately misclassified as sophisticated or wholesale investors rather than retail investors to avoid paperwork and the extra regulatory requirements attached to retail clients. Advisers pushed investors into more complex exotic products, many of them Macquarie-related products, which pay the advisers higher fees and commissions.
An internal review at Macquarie in 2008 revealed ‘‘compliance deficiencies’’ within Macquarie Private Wealth and found that 80 per cent of its advisers were not up to scratch.
A lot of the problems seem to be due to vertical integration, whereby product manufacturers own financial planning groups and use them as sales channels to shift product. Thus so-called ‘advice businesses’ revolve around shifting product rather than giving advice.
Many files have missing statements of advice, do not show any research was undertaken as to the client’s needs or that any investment alternatives were considered.
ASIC’s investigation has found problems with the treatment of self-managed super funds, recent file notes that refer to months-old transactions and forms that were not properly filled out.
A recent Senate inquiry said it was ‘‘concerned with the efficacy of the enforceable undertaking entered into as a result of serious compliance deficiencies within Macquarie Private Wealth’’. It recommended ASIC put Macquarie Private Wealth under ‘‘intensive surveillance’’.
CBA unveiled a new compensation program in July 2014 that will allow anyone who signed up with a CBA financial planner through Commonwealth Financial Planning and Financial Wisdom between 2003 and 2012 to apply to the bank for compensation.
All claims will be assessed by ‘‘a specialist Commonwealth Bank team’’ before an offer is made by an independent customer advocate funded by the bank.
If a customer does not agree with the assessment, it can be reviewed by an independent panel.
An internal review at ANZ Bank in 2014 has reported multiple breaches of its obligations in its financial planning arm to the corporate regulator, the Australian Securities and Investments Commission. ANZ spokesman Stephen Ries said the bank was reviewing thousands of files and first notified ASIC of ”irregularities” in August 2013.
”We found some instances where we hadn’t delivered all the services that we said we would,” he said.
”We promptly reported that to ASIC and we are continuing a review of all our files and reporting that to ASIC.”
It appears that there are serious flaws in the operation of the industry by some of the major players. The Government and ASIC have been very slow to respond to the problems. ASIC was very slow to respond to complaints by a CBA whistleblower several years ago and the Government is resisting calls for a Royal Commission following the Senate inquiry and report.
If you think your investments have been adversely affected whilst in the hands of your financial planner, I can assist you investigate whether have been affected by any improper or illegal conduct and, if so, seek compensation.